/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES/
TORONTO, May 16, 2022
/CNW/ - First Capital REIT ("First Capital", "FCR" or the
"REIT") (TSX: FCR.UN) announced earlier today the approval by the
TSX of a normal course issuer bid ("NCIB") pursuant to which it may
repurchase its trust units for cancellation beginning on
May 18, 2022. The repurchase of trust
units will be primarily funded by the disposition of non-core
properties that are expected to be sold at or above IFRS value.
Debt Capital and NCIB
Over the past three years, the REIT has completed approximately
$1.5 billion of dispositions, while
continuing to invest meaningfully in the business. Collectively,
these activities achieved several of First Capital's strategic
objectives, including strengthening the balance sheet and
significantly improving the composition of the REIT's real estate
portfolio. Notably, FCR has met these objectives while selling
properties at prices generally in excess of their respective IFRS
values.
Adam Paul, President and CEO of
First Capital said, "Our investment activity over the last three
years has materially improved our best-in-class grocery anchored
portfolio while at the same time strengthening our balance sheet.
Given the solid fundamentals of our real estate, our focus is
squarely on capitalizing on the significant opportunities we have
to grow the intrinsic value of FCR, which today includes continuing
to advance our real estate strategy and selling non-core properties
at or above the IFRS carrying value, while acquiring FCR units to
the extent they trade well below NAV, which is currently
$24.55."
Notwithstanding the significant improvement of the REIT's real
estate portfolio and financial position, market pricing dynamics
have made the unsecured debenture market an impractical source of
capital for FCR from a cost perspective. With more than
$7.5 billion of unencumbered,
best-in-class grocery anchored assets located in Canada's most densely populated
neighbourhoods, the depth and reliability of the secured debt
market is not only adequate but ample to support the execution of
First Capital's strategy and take advantage of growth opportunities
over the foreseeable future. The REIT is comfortable with its
current debt to assets ratio, in the mid-40 percent range, and
therefore it is not focused on deleveraging beyond present levels
at this time.
First Capital has implemented an NCIB pursuant to which it may
repurchase its trust units for cancellation beginning on
May 18, 2022. The substantial
disconnect that currently exists between the intrinsic value of the
REIT's assets and its publicly traded securities presents a
significant opportunity to generate value through the repurchase of
its trust units. Therefore, from time to time, the purchase of FCR
trust units at certain market prices below NAV presents an
attractive use of the REIT's funds that should afford additional
value and liquidity for the issued and outstanding units while
benefitting remaining unitholders by increasing their proportionate
equity interest in the REIT.
Dispositions
First Capital has agreed to sell a 100% interest in two
properties: (i) La Porte de Gatineau located in Gatineau, Quebec, and (ii) Bayview Lane Plaza, located in Thornhill, Ontario for an aggregate sale price
of approximately $80 million. The
aggregate sale price is in-line with the properties' Q1 2021 IFRS
value, which had previously been marked-up in late 2021 to reflect
the expected selling prices. Closing of the transactions remains
subject to certain closing conditions typical for transactions of
this type and are scheduled to occur in the second and third
quarters.
These transactions are yet another example of the demand and
premium value of the REIT's assets in the private markets. The
properties sold by FCR are non-core and their disposition frees up
capital to be reallocated to higher growth opportunities, including
repurchase of the REIT's units, which are trading at a deep
discount to NAV.
About First Capital REIT (TSX:
FCR.UN)
First Capital is a leading owner, operator and developer of
grocery anchored and mixed-use real estate located in Canada's most densely populated cities. First
Capital's focus is on creating thriving urban neighbourhoods to
generate value for businesses, residents, communities and our
investors.
Forward-looking Statement
Advisory
This press release contains forward-looking statements and
information within the meaning of applicable securities laws,
including but not limited to statements related to First Capital's
intention to effect purchases of Units pursuant to an NCIB, the
depth and reliability of the secured debt market and FCR's real
estate portfolio. These forward-looking statements are not
historical facts but, rather, reflect First Capital's current
expectations and are subject to risks and uncertainties that could
cause the outcome to differ materially from current expectations.
Such risks and uncertainties include those risks discussed in First
Capital's Management's Discussion and Analysis for the year ended
December 31, 2021 and for the quarter
ended March 31, 2022 and in its
current Annual Information Form. Readers, therefore, should not
place undue reliance on any such forward-looking statements. First
Capital undertakes no obligation to publicly update any such
forward-looking statement or to reflect new information or the
occurrence of future events or circumstances except as required by
applicable securities law.
SOURCE First Capital Real Estate Investment Trust